Correlation Between Under Armour and Dine Brands

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Can any of the company-specific risk be diversified away by investing in both Under Armour and Dine Brands at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Under Armour and Dine Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Under Armour C and Dine Brands Global, you can compare the effects of market volatilities on Under Armour and Dine Brands and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Under Armour with a short position of Dine Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Under Armour and Dine Brands.

Diversification Opportunities for Under Armour and Dine Brands

0.76
  Correlation Coefficient

Poor diversification

The 3 months correlation between Under and Dine is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Under Armour C and Dine Brands Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dine Brands Global and Under Armour is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Under Armour C are associated (or correlated) with Dine Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dine Brands Global has no effect on the direction of Under Armour i.e., Under Armour and Dine Brands go up and down completely randomly.

Pair Corralation between Under Armour and Dine Brands

Allowing for the 90-day total investment horizon Under Armour C is expected to generate 1.13 times more return on investment than Dine Brands. However, Under Armour is 1.13 times more volatile than Dine Brands Global. It trades about 0.02 of its potential returns per unit of risk. Dine Brands Global is currently generating about -0.04 per unit of risk. If you would invest  859.00  in Under Armour C on September 12, 2024 and sell it today you would earn a total of  59.00  from holding Under Armour C or generate 6.87% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Under Armour C  vs.  Dine Brands Global

 Performance 
       Timeline  
Under Armour C 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Under Armour C are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Under Armour sustained solid returns over the last few months and may actually be approaching a breakup point.
Dine Brands Global 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Dine Brands Global are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very weak forward indicators, Dine Brands displayed solid returns over the last few months and may actually be approaching a breakup point.

Under Armour and Dine Brands Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Under Armour and Dine Brands

The main advantage of trading using opposite Under Armour and Dine Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Under Armour position performs unexpectedly, Dine Brands can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Dine Brands will offset losses from the drop in Dine Brands' long position.
The idea behind Under Armour C and Dine Brands Global pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.

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